Amid Rising Costs, Families Pay Less for College

The cost of college is up, but the average American family is spending less on higher education, according to a report by Sallie Mae (ABC News).

The reason? Families are making smarter financial decisions.

According to the annual survey released by the student-loan company, since the recession more American families are making decisions about their children's education based on its price tag-most likely out of necessity.

Tuition continues to rise. Over the past five years the cost of tuition at public four-year colleges is up 27% above overall inflation with the average sticker price at public universities now $17,860 (Associated Press).

Student loan debt is also climbing. Members of the national college class of 2011 had 5% more debt at graduation than the class before them with an average debt load of $26,600, according to the Institute for College Access and Success, Oakland, Calif.

Despite-or because of-these trends, Sallie Mae found college spending per student dropped to $21,000 during 2012 from its 2010 peak, when families were paying $24,097.

Here are some strategies families are using to cut the cost of college:

• Live at home. The report found 57% of students live with their parents or relatives, up from 41% last year.

• Cut the pricey top picks. Nearly 70% of families eliminated colleges during the application process due to their high price tags, up from 58% in 2008. About one-fifth of low-income students chose to transfer to less-expensive schools.

• Take a student job. Nearly half the students surveyed reported increasing their work hours in 2013.

• Finish quicker. Nearly 30% of students accelerated their course work to pay for fewer semesters.

• Use grants and scholarships. Families reported covering about 30% of their school bills with grants and scholarships-the biggest portion of their payment sources.

• Start a college-savings plan. Low-income, middle-income, and high-income families all increased their use of 529 plans, with 17% of families overall using the tax-advantaged college-savings plan-up from 12% the previous year.

• Begin paying back your loans immediately. Twenty-two percent of students reported they were paying back their loans while still enrolled in school to reduce the overall cost.

• Choose a more lucrative major. About 20% of student reported changing their majors to more marketable fields.